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Global Economy

Tax reform makes Ohio more competitive in a global economy.

Ohio's private and public leadership collaborated to effect the most sweeping tax reforms in 75 years - modernizing the tax code, providing welcome tax relief for Ohio citizens and helping grow the economy. This tax reform helps Ohio companies provide an even stronger value proposition to the world's consumers by lowering operating costs and helps employees better achieve their personal aspirations by increasing their disposable income.

The net impact of the reform is that Ohio now offers companies the lowest new capital investment tax structure in the Midwest.

Unlike in other states, companies are no longer taxed for investing in capital improvements necessary to be competitive. Projects to modernize manufacturing lines and invest in machinery and equipment can now more easily move from the planning phase to execution.

The key to success in Ohio's tax reform is that it was designed around a set of principles agreed to by private and public sector leaders. The six guiding principles are:

  1. Grow the talent base, which is a critical element in building businesses and growing the economy, by eliminating high tax burdens on individuals.
  2. Foster new capital investment, especially in Ohio's globally renowned advanced manufacturing, advanced design and advanced materials industries.
  3. Broaden the base to include all sectors of the economy and create a true risk sharing partnership between the public and private sectors.
  4. Stimulate entrepreneurial and start-up activity, which is the bedrock of a growing economy.
  5. Make the tax code fair, equitable and simple for taxpayers.
  6. Enable the state to invest responsibly by providing a stable and sufficient revenue stream.

The net effect of the new tax code is to shift the burden away from taxing investment, profitability and wealth creation - toward taxing consumption. This strategy allows companies and individuals to invest in creating a stronger future.

Tax Reform at Work in Northeast Ohio

Learn more about how Ohio's tax reform is helping companies in Northeast Ohio.

The real world impact is a reduction of up to 63% in Ohio's tax burden.

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Ohio Tax Reduction Chart

The Ohio tax reform made significant changes in almost all major state and local taxes. The positive impact will grow through the five-year phase-in period and reach maximum impact in 2010. Based upon computer forecasts, the following provides an overview of the projected impact of this reform:

  • Provide a cumulative, five-year tax reduction of $10.6 billion, compared to forecasts of the taxes that would otherwise have been collected based on the tax system in place in 2005.
  • Eliminate Ohio's corporate profits and net worth taxes, a reduction of roughly $1.6 billion (2010 figure) a year in business taxes; subsidiaries of banks and insurance companies will still pay the tax.
  • Eliminate local property taxes on inventory, machinery and equipment, and furniture and fixtures for an annual savings of roughly $1.6 billion in business taxes.
  • Lower sales taxes by roughly $770 million, compared to the sales tax rate that applied in 2005.
  • Offset part of these revenue reductions through an increase in cigarette taxes and adoption of a low-rate, broad-based gross receipts tax on virtually all types of businesses. The cigarette tax increase will generate roughly $398 million in 2010. The gross receipts tax will generate roughly $1.6 billion.

Tax Reform at a Glance*

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Ohio Tax Reform

Specialized econometric models, built for the Ohio Business Roundtable by Ernst & Young, project that by 2010 the reforms will grow Ohio's economy by increasing gross state product by $5.6 billion and personal income by $3.6 billion. It also will inject an additional $6.3 billion of new capital investment in Ohio's economy. There is every indication that we are well on our way to achieving this target as evidenced by the data reflected on pages 16 and 17 in the hard copy of the report.